Kennedy Hodges, L.L.P. v. Ventura Gobellan, Jr. and Paula Gobellan
433 S.W.3d 542
| Tex. | 2014Background
- Kennedy Hodges, L.L.P. sued former associate Canonero Brown and later sought to compel arbitration in a dispute with former clients Gobellan, based on a contingency-fee agreement containing an arbitration clause.
- Brown left the firm, taking several clients, including the Gobellans, with him; the Gobellans were not a party to the Brown Suit.
- The Gobellans’ contingency-fee agreement with Kennedy Hodges contains an arbitration clause; the Gobellans were parties to a separate Gobellan Suit later arbitratable with Kennedy Hodges.
- The Brown Suit involved Brown’s employment agreement and tort claims; there was no arbitration agreement between Kennedy Hodges and Brown.
- Kennedy Hodges settled with Brown for a portion of contingency fees from former firm clients who retained Brown, including the Gobellans; the Gobellans were not party to that settlement.
- The Court of Appeals held that Kennedy Hodges had waived its right to arbitrate with the Gobellans by litigating with Brown; the Texas Supreme Court reversed and remanded, ruling no waiver occurred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Kennedy Hodges waive the right to arbitrate with Gobellans by litigating with Brown? | Hodges did not waive; Brown suit involved nonparty conduct and there was no arbitration with Brown | Litigation with Brown substantially invoked the process against Gobellans and prejudiced them | No waiver; no substantial invocation against Gobellans |
| Was there prejudice to Gobellans from Hodges’ litigation with Brown? | No prejudice to Gobellans since they were not party to Brown Suit | Litigation with Brown caused delay/expense affecting Gobellans | No prejudice established |
| Do Hodges’ pleadings against Gobellans constitute substantial invocation of the litigation process? | Pleadings against Gobellans and no discovery do not amount to substantial invocation | Intervening and moving to compel arbitration shows invocation | No substantial invocation; no waiver |
Key Cases Cited
- Perry Homes v. Cull, 258 S.W.3d 580 (Tex. 2008) (waiver requires substantial invocation and prejudice; case-by-case analysis)
- In re Service Corp. International, 85 S.W.3d 171 (Tex. 2002) (litigation against one claim does not automatically waive as to related arbitration with another party)
- In re Vesta Ins. Grp., Inc., 192 S.W.3d 759 (Tex. 2006) (limited pleading and discovery do not necessarily constitute substantial invocation)